Recognition of trusts and foundations in Georgia under the Law on Free Industrial Zones (2007) — practitioner checklist

Foreign families and wealth advisers who route assets through Georgia's Free Industrial Zone entities routinely encounter a structural gap that Georgian tax neutrality alone does not resolve: neither the Law on Free Industrial Zones (2007) nor the broader Georgian Civil Code provides a domestic trust institution, yet the regime is frequently used as the holding layer beneath a Liechtenstein foundation, a Cayman Islands trust, or a similar foreign vehicle. The result is a mismatch between the legal form recognised abroad and the form that Georgian authorities — including FIZ administrations and Georgian notaries — will deal with directly. This checklist addresses that mismatch at each decision point: entity selection, documentation, tax status, succession mechanics, and cross-border enforceability. It is directed at private wealth advisers, family office counsel, and trustees managing structures with a Georgian FIZ component.

The Law on Free Industrial Zones (2007) permits the registration within a Free Industrial Zone of a legal entity — in practice, most commonly a limited liability company (LLC) under Georgian law — rather than a trust or foundation as a distinct legal form. A trust or foundation operating at the level above the FIZ vehicle is therefore a foreign entity that owns (or purports to own) an interest in a Georgian-registered company; it is not itself registered or recognised within the FIZ framework.

The first checkpoint is classification: is the foreign vehicle a trust (a non-entity fiduciary arrangement under which a trustee holds assets for beneficiaries), a foundation (a legal entity under civil law, capable of owning assets and entering contracts in its own name), or a hybrid (e.g. a Liechtenstein Anstalt or a Panama private interest foundation)?

This distinction is material because Georgian law will characterise the foreign vehicle based on Georgian conflict-of-laws rules, which look to the law of the place of incorporation of the relevant entity. A foundation incorporated under Liechtenstein, Dutch, or Austrian law will generally be recognised as a legal entity in Georgia on the basis of its incorporation — it can appear in a Georgian share register as a shareholder. A common law trust, by contrast, has no legal personality and cannot appear directly in a Georgian share register; the trustee (in its capacity as trustee) or a nominee structure must hold the Georgian LLC interest instead.

Checklist — confirm before proceeding:

• Is the foreign vehicle a legal entity (foundation, Stiftung, Anstalt) or a fiduciary arrangement (trust)?
• If a trust: is the trustee a corporate trustee capable of holding foreign equity in its own name under its home law?
• If a foundation: obtain a certificate of good standing and confirmation that it is in legal existence and capable of owning foreign assets under its constitutive documents.
• Verify that the FIZ LLC's constitutional documents permit a foreign legal entity (or corporate trustee) to hold 100% of the participatory interest.
• Check whether any Georgian FIZ administration requirements impose nationality or residency conditions on ultimate beneficial owners — these vary by zone and have been subject to administrative update.

Note: If the trust deed or foundation charter restricts asset transfers or imposes prior consent requirements for share disposals, those restrictions are enforceable under the foreign governing law but are not automatically binding on a Georgian counterparty or FIZ administration unless registered or notarially acknowledged in Georgia. Failure to record this can create a gap between the structure's intended governance and its de facto enforceability in Georgia.

The FIZ regime under the 2007 Law provides that entities operating within a Free Industrial Zone are exempt from Georgian corporate income tax, VAT, and import/export duties on transactions falling within the zone's permitted activities. This is one of the primary structuring rationales for using a Georgian FIZ vehicle in an international wealth structure.

However, the tax-neutrality of the FIZ layer does not automatically resolve the tax treatment of distributions from the FIZ entity upward to the trust or foundation layer. This is a gap that advisers frequently underestimate.

Key questions at this checkpoint:

First, how does the jurisdiction of the trust or foundation treat income and gains received from a foreign corporate entity? Many civil-law foundation jurisdictions (Liechtenstein, Netherlands, Austria) impose their own assessment on the foundation's worldwide income; the Georgian FIZ exemption is a Georgian concession, not a home-jurisdiction concession.

Second, does any tax treaty between Georgia and the foundation's or trust's home jurisdiction allocate taxing rights over dividends, interest, or royalties paid by the FIZ entity? Georgia has concluded a network of double-tax treaties; their interaction with the FIZ regime must be confirmed for each structure.

Third, where the trust has beneficiaries who are tax-resident in a high-tax jurisdiction — including Russia, Germany, France, or the United Kingdom — the receipt of distributions (whether directly or by attribution through controlled foreign company rules or trust-attribution rules) may trigger tax liability in the beneficiary's jurisdiction irrespective of Georgian exemptions.

Checklist:

• Obtain a written tax opinion from Georgian-qualified tax counsel confirming FIZ status for the specific entity and its planned activities.
• Map the full distribution chain: FIZ LLC – foreign trust or foundation – beneficiary. Identify the tax treatment at each step under each applicable jurisdiction's domestic law.
• If beneficiaries are Russian tax residents: Russian controlled foreign company (CFC) rules have application to beneficial interests in foreign trusts and foundations. Confirm CFC notification and disclosure obligations with Russian-qualified counsel before finalising the structure. See the firm's Succession Planning practice at /jurisdictions/georgia/succession/ and the Private Wealth & Structuring practice at /jurisdictions/georgia/private-wealth/ for cross-border framing.
• Confirm that the FIZ entity's activities remain within the scope of FIZ-permitted operations; activities outside that scope lose FIZ tax exemption.

Note: Georgian FIZ status is activity-specific and registration-specific. A change in the FIZ entity's activities — for example, a shift from manufacturing or trading to holding real property — may disqualify the entity from FIZ treatment and expose it to standard Georgian corporate income tax. This is an ongoing compliance obligation, not a one-time clearance.

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Georgian succession law follows civil-law testamentary principles. A Georgian-registered LLC interest held by a foreign trust or foundation passes on the trust's or foundation's terms — not under Georgian inheritance law — provided that the trust or foundation validly holds the interest as a matter of its own governing law and as a matter of Georgian conflict-of-laws rules.

This item addresses the practical gap in succession mechanics.

For a foundation holding a Georgian FIZ LLC interest, succession to the foundation itself (i.e. the question of who controls or benefits from the foundation after the founder's death) is governed by the foundation's constitutive documents and its home-jurisdiction law. Georgian courts and notaries will not re-characterise this on Georgian succession principles provided the foundation is a validly existing foreign legal entity. However, Georgian notaries may require apostilled documentation — translated into Georgian — confirming the foundation's continued legal existence, the identity of its authorised representative, and its authority to exercise rights in the Georgian LLC.

For a trust holding through a corporate trustee, the succession mechanics at the trust layer are entirely governed by the trust deed and the trustee's home jurisdiction. The Georgian FIZ LLC does not "see" the trust; it sees only the corporate trustee as the registered shareholder. A change of trustee — including on succession — requires updating the Georgian LLC's share register and, where applicable, the FIZ administration's records of the beneficial owner.

Checklist:

• Confirm that the trust deed or foundation charter expressly addresses succession to the structure's interest in the Georgian FIZ entity, including appointment of a successor trustee or foundation board.
• Establish a document chain for Georgian notarial purposes: apostilled certificate of good standing + authorised representative confirmation + Georgian-language notarially certified translation.
• If the founder or settlor is a Georgian citizen or Georgian tax resident, confirm whether Georgian forced heirship provisions (mandatory shares) apply to assets held indirectly through a foreign trust or foundation — this is a contested area of Georgian private international law and requires localised counsel advice.
• Register any pledge, mortgage, or security interest over the FIZ LLC interest in the Georgian public register separately from the share register entry; these do not follow automatically from the foreign trust or foundation documentation.
• For Russian-resident or Russian-national beneficiaries: confirm that the trust or foundation structure does not trigger Russian currency control notification requirements in respect of the beneficial interest in a foreign structure. See Asset Protection at /jurisdictions/georgia/asset-protection/ for the cross-border structuring framing.

Note: Georgian notaries are not required to recognise the concept of a trust as such, and some notarial offices in Tbilisi have declined to record a "trustee in its capacity as trustee" as a shareholder in an LLC without a court or administrative clarification. Advisers should anticipate this procedural risk and structure the shareholding through a corporate trustee holding in its own name, with the trust relationship documented separately, rather than attempting to record a trust relationship on the face of the Georgian register.

Georgian anti-money laundering legislation imposes beneficial ownership disclosure requirements on Georgian entities — including FIZ-registered LLCs. The FIZ regime does not exempt entities from these obligations. Since 2019, Georgian law has required disclosure of beneficial owners (ultimate controlling natural persons) for entities registered in Georgia, with updates reflected in the relevant register.

Where a Georgian FIZ LLC is owned by a foreign trust or foundation, the beneficial ownership disclosure requirement requires tracing through the trust or foundation structure to identify the natural person(s) who ultimately control the structure or are its beneficial owners. For a discretionary trust this raises specific documentation challenges: the beneficial class may be wide, and no single natural person may hold a fixed beneficial interest.

Checklist:

• Obtain a beneficial ownership map — prepared by the trust's or foundation's administrator — identifying the natural persons who are beneficial owners for Georgian AML purposes. This may require a formal legal opinion from the trust's home-jurisdiction counsel.
• Confirm the disclosure standard applied by the specific FIZ administration — different zones (Tbilisi, Poti, Kutaisi, Hualing) have applied the beneficial ownership disclosure requirements with varying levels of scrutiny and documentation format.
• For discretionary trusts: document the trustee's approach to identifying beneficial owners consistent with the Financial Action Task Force (FATF) standards that Georgia has committed to implementing, and prepare a position paper for submission to the FIZ administration if the discretionary structure generates a disclosure challenge.
• Keep the beneficial ownership documentation current: a change of trustee, a change of protector, or an amendment to the class of beneficiaries may trigger a re-disclosure obligation. Build a compliance calendar that includes Georgian AML update filings.
• Confirm that the beneficial ownership disclosure for the Georgian FIZ entity is consistent with any disclosures made to other jurisdictions — including the trust's or foundation's home-jurisdiction regulator and (where applicable) Russian Federal Tax Service notifications under Russian CFC rules.

Note: Inconsistent beneficial ownership disclosures across jurisdictions — where the Georgian register shows a different ultimate controller than the position reported to a European regulator or the Russian FTS — create significant compliance and reputational risk. The Georgian registration is publicly accessible; inconsistency is detectable.

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This item addresses the risk that arises when a dispute — between co-beneficiaries, between a trustee and a beneficiary, or between the structure and a third party — requires engagement with the Georgian judicial or administrative system.

Georgian courts apply Georgian conflict-of-laws rules to determine which law governs a foreign trust or foundation. For a foundation, Georgian courts will generally apply the law of the place of incorporation; for a trust, Georgian courts will look to the law expressly chosen in the trust deed (where that choice is permissible) or to the law of closest connection.

However, Georgian courts have limited institutional familiarity with common law trust concepts. In practice, where a foreign trust or foundation needs to assert rights before a Georgian court — including in proceedings relating to a FIZ LLC — the foreign document will require:

• An apostilled and notarially certified Georgian translation of the trust deed or foundation charter and any amendments.
• Expert evidence or a legal opinion from a Georgian-qualified lawyer on the recognition of the foreign legal form and its effect on the proceedings.
• Consideration of whether the foreign trust or foundation document is enforceable as a matter of Georgian public policy — Georgian courts retain a public policy exception.

Checklist:

• Retain Georgian-qualified counsel to review the trust deed or foundation charter from the perspective of Georgian conflict-of-laws rules before the structure is deployed.
• Identify in advance the Georgian jurisdiction (Tbilisi City Court or the relevant Commercial Court) that would have jurisdiction over disputes involving the FIZ LLC, and confirm that the trust's or foundation's governing law would be recognised in that forum.
• Include a dispute resolution clause in any agreement between the FIZ LLC and the trust or foundation (e.g. shareholder agreement, management agreement) that specifies Georgian or international arbitration, as appropriate, and is enforceable under both Georgian law and the foreign governing law.
• Ensure that the FIZ LLC's charter documents do not contain provisions that conflict with the trust's or foundation's succession or governance requirements — conflicts between the constitutional documents of the two layers create enforceability gaps.
• For structures involving Russian-resident beneficiaries or Russian-origin assets: confirm with Russian-qualified counsel whether any Russian court or arbitral claim could attach to the Georgian FIZ interest, and whether the trust or foundation layer provides substantive protection under Russian conflict-of-laws rules. See Enforcement of Foreign Judgments & Awards at /jurisdictions/georgia/enforcement/ and Cross-border Disputes at /jurisdictions/georgia/disputes/.

Note: The FIZ regime does not provide immunity from Georgian judicial process for the FIZ entity. FIZ status is a tax and operational designation; it does not confer asset protection against creditors or claimants who pursue the FIZ LLC through Georgian courts.

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Q: Does the Law on Free Industrial Zones (2007) in Georgia specifically recognise trusts or foundations as eligible FIZ participants?

A: No. The 2007 Law permits legal entities registered under Georgian law — most commonly limited liability companies — to operate within a Free Industrial Zone. It does not create or recognise a Georgian trust institution, nor does it provide a specific vehicle for foreign foundations. Foreign trusts and foundations interact with the FIZ regime as shareholders or owners of a Georgian-registered FIZ entity; they are not themselves FIZ participants. This structural distinction is the source of most of the recognition and documentation issues covered in this checklist.

Q: What is the principal risk for a common law trust holding an interest in a Georgian FIZ LLC?

A: The principal risk is that a common law trust has no legal personality and cannot appear directly as a shareholder in a Georgian LLC. The trustee — in its capacity as trustee, or as a corporate entity holding in its own name — must hold the Georgian interest. If the shareholding structure does not correctly reflect this, a change of trustee, a beneficiary dispute, or a succession event may generate a gap between the trust's intended ownership and the position on the Georgian company register. Rectifying a Georgian register entry can require notarial and judicial process in Georgia, which is time-consuming and disruptive to the structure's administration.

Q: Which Georgian Free Industrial Zone is most suitable for structures involving foreign trust or foundation ownership?

A: No single FIZ is definitively preferable for all trust or foundation holding structures; the choice depends on the planned activities of the FIZ entity, the physical infrastructure requirements, and the administrative practices of the specific zone. The principal FIZs in Georgia as of the time of writing are located in Tbilisi, Poti, Kutaisi, and the Hualing Tbilisi Free Industrial Zone. The administrative approach to beneficial ownership disclosure and foreign entity documentation varies between zones. Advisers should verify current administrative requirements directly with the relevant FIZ administration and with Georgian-qualified counsel before registration.

• [Georgia Free Industrial Zone — company formation and registration overview](/jurisdictions/georgia/company-formation/)
• [Private wealth structuring in Georgia: options for foreign families](/jurisdictions/georgia/private-wealth/)
• [Succession planning in Georgia: a guide for foreign asset holders](/jurisdictions/georgia/succession/)

Vetrov & Partners is a Russian boutique law firm established in 2009. The firm is recognised by Pravo-300 — Russia's principal legal directory — for eight consecutive years, and is listed as a trusted adviser by the German Consulate General in Novosibirsk.

This article was prepared with contributions from Nino Beridze, Contributing Regional Analyst — Georgia, who advises on Georgian business relocation, tax structuring, and Free Industrial Zone matters. Vetrov & Partners advises clients with cross-border interests spanning Russia and the South Caucasus on the Russian-law dimension of multi-jurisdictional structures, including succession planning, asset protection, and enforcement matters.

For cross-border matters with a Russian dimension: info@vetrovpartners.com | WhatsApp / Telegram: +7 (983) 510-38-76 | t.me/vitvetcom

This publication is provided for informational purposes only and does not constitute legal advice under Russian or any other applicable law. The information herein should not be relied upon as a substitute for professional legal counsel tailored to your specific circumstances. Vetrov & Partners is a Russian-qualified law firm. For matters governed by foreign law or requiring local admission in another jurisdiction, we collaborate with trusted counsel in the relevant jurisdiction. For advice regarding your particular situation, please contact info@vetrovpartners.com.

— Nino Beridze Contributing Regional Analyst — Georgia, Vetrov & Partners vetrovpartners.com/contributions/